Analysis of Overall and Pure Technical Efficiency of Tourism in Europe

Abstract

The aim of this paper is to assess the overall and pure technical efficiency of tourism in European countries in 2017 using the output-oriented Charnes, Cooper and Rhodes (1978, 1979), and Banker, Charnes and Cooper (1984) data envelopment analysis methodology. The countries were divided into two groups: European Union countries and non-European counties. We identified two input and two output variables for each group. Input variables were identified using the principal component analysis method, starting from fourteen pillars that measure the performance of countries in the field of travel and tourism, and are published in the regular reports of the World Economic Forum. Then, two output variables were defined (the total (direct and indirect) contribution of travel and tourism to gross domestic product, and the direct contribution of tourism to employment growth rate), to determine the relative efficiency of decision-making units within the formed homogeneous groups of countries, among which the group of Western Balkan countries was singled out. This analysis enabled us, based on relatively scarce potential, to propose guidelines for a tourism development strategy for the entire Western Balkans region.